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Old 02-10-2017, 02:26 PM   #41
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This thread made me curious. I am not retired yet, but have modeled the retirement using many calculators. I never looked at the percentage, just results.
The FIDO RPM tool will show you the forecast percentage and it really comes down to market results.

In an average market, I need to take out 1% to 2%.
A below average market it becomes 2% up to just under 3%
In a significantly below average market it jumps to 3% up to 4% in some years.
These are with a 55/45 AA
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Old 02-10-2017, 02:40 PM   #42
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Someone I work with just shared a paper they authored about basing your withdrawal rate on the 10 year government bond yield. I can't share that paper, but found something online with the same philosophy: The Ideal Withdrawal Rate For Retirement Does Not Touch Principal | Financial Samurai


I'll have to really read this when I have more brain capacity. W*rk has kicked my tail end this month, and it's only day 10.
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Old 02-10-2017, 02:44 PM   #43
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I had no interest in continuing to work until I didn't need to touch principal.
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Old 02-10-2017, 02:46 PM   #44
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Someone I work with just shared a paper they authored about basing your withdrawal rate on the 10 year government bond yield. I can't share that paper, but found something online with the same philosophy: The Ideal Withdrawal Rate For Retirement Does Not Touch Principal | Financial Samurai


I'll have to really read this when I have more brain capacity. W*rk has kicked my tail end this month, and it's only day 10.
The assumption with that approach as stated in your link is that you will die with lots of money because you won't touch the principle. If that is your goal, then that is a good rule to follow, but man, you are leaving lots of "fun" sitting in your investments.
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Old 02-10-2017, 03:08 PM   #45
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Anything above inflation is gain, and spendable to me.

That said, one cannot spend all the gains each year, and has to save some for possible future long periods of drought. Hence, the 3-4% rule of thumb.
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Old 02-10-2017, 03:35 PM   #46
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The assumption with that approach as stated in your link is that you will die with lots of money because you won't touch the principle.
Don't anyone dare touch my principles. I play a little looser with my principal though
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Old 02-10-2017, 03:38 PM   #47
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Old 02-10-2017, 04:29 PM   #48
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Originally Posted by SumDay View Post
Someone I work with just shared a paper they authored about basing your withdrawal rate on the 10 year government bond yield. I can't share that paper, but found something online with the same philosophy: The Ideal Withdrawal Rate For Retirement Does Not Touch Principal | Financial Samurai


I'll have to really read this when I have more brain capacity. W*rk has kicked my tail end this month, and it's only day 10.
I think that concept is also called "never eat your seed corn" or "never spend principal" and used to be a more common way of investing. A portfolio could still lose to inflation, though unless a retiree only took out the real, not nominal, return.
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Old 02-10-2017, 04:34 PM   #49
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The assumption with that approach as stated in your link is that you will die with lots of money because you won't touch the principle. If that is your goal, then that is a good rule to follow, but man, you are leaving lots of "fun" sitting in your investments.
Maybe, but that depends on your portfolio size, values, hobbies, etc. After a certain point does spending more money always equal more fun? Research varies, but at least some, if not most, positive psychology research, points to diminishing returns after a certain point of spending. Some people are minimalists or are into simple living.
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Old 02-10-2017, 04:53 PM   #50
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Maybe, but that depends on your portfolio size, values, hobbies, etc. After a certain point does spending more money always equal more fun? Research varies, but at least some, if not most, positive psychology research, points to diminishing returns after a certain point of spending. Some people are minimalists or are into simple living.
+1

Maybe I'm in the minority here, but I feel a sense of accomplishment when I look at something I worked hard to build. It's the same whether it's a home improvement project or a portfolio. I don't derive that same satisfaction from empty spending.
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Old 02-10-2017, 04:57 PM   #51
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Don't anyone dare touch my principles. I play a little looser with my principal though
Oops.
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Old 02-10-2017, 04:58 PM   #52
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Maybe, but that depends on your portfolio size, values, hobbies, etc. After a certain point does spending more money always equal more fun? Research varies, but at least some, if not most, positive psychology research, points to diminishing returns after a certain point of spending. Some people are minimalists or are into simple living.
I was thinking travel and experiences, not just more "stuff".
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Old 02-10-2017, 05:20 PM   #53
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I was thinking travel and experiences, not just more "stuff".
Not all personality types are into traveling the world for months at a time. And even some who do manage to spend very little between VRBO, travel hacks, credit card points, etc.

Related link:

Money Buys Happiness When Spending Fits our Personality

The late Thomas Stanley, co-author of The Millionaire Next Door, found that many millionaires are cheap dates:

"When people ask me about the activities of millionaires, I have a short answer. As I wrote in The Millionaire Mind, the typical millionaire is, in three words, a cheap date! Yes, a cheap date even among a fraction of the top 1% of the wealth holders in America. Many of the favorite activities of millionaires are not at all costly. It matters not if you are rich or poor, the best things in life are free or close to it."
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Old 02-10-2017, 05:55 PM   #54
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Originally Posted by daylatedollarshort View Post
Not all personality types are into traveling the world for months at a time. And even some who do manage to spend very little between VRBO, travel hacks, credit card points, etc.

Related link:

Money Buys Happiness When Spending Fits our Personality

The late Thomas Stanley, co-author of The Millionaire Next Door, found that many millionaires are cheap dates:

"When people ask me about the activities of millionaires, I have a short answer. As I wrote in The Millionaire Mind, the typical millionaire is, in three words, “a cheap date!” Yes, a cheap date even among a fraction of the top 1% of the wealth holders in America. Many of the favorite activities of millionaires are not at all costly. It matters not if you are rich or poor, the best things in life are free or close to it."
I am penny wise too. I wouldn't be able to FIRE if I wasn't, but unlike some on here, I plan to see the world.
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Old 02-10-2017, 06:08 PM   #55
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OP here

Thanks for all the responses. What works for everyone seems to vary but 3% seems to be the average.

In my retirement expense calculation I am sure my numbers are high since they are based on expenses during the past two years when we worked. I used Quicken for past 2 years and know the exact amount we spent. This was with our company paying health premiums so I took the current amount 1757.00 monthly and added that amount to the retirement expense. There is no doubt in some areas our expenses with be lower when we retire like dining out in restaurants. We also spent 7,000 on travel which is an expense that can be reduced if needed. Health insurance will be higher.

I could actually take our health insurance premiums out of our cash buffer account each year. This would allow us to withdraw 3% which seems to be a safer rate. This seems like cheating but my buffer money is not added into the retirement portfolio since it is all in cash.

Thanks everyone. Your insight and advice is invaluable for someone near retirement who wants to get it right.
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Old 02-10-2017, 06:19 PM   #56
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Originally Posted by SumDay View Post
Someone I work with just shared a paper they authored about basing your withdrawal rate on the 10 year government bond yield. I can't share that paper, but found something online with the same philosophy: The Ideal Withdrawal Rate For Retirement Does Not Touch Principal | Financial Samurai


I'll have to really read this when I have more brain capacity. W*rk has kicked my tail end this month, and it's only day 10.
A quick scan of the article you linked suggests a 3% WR will keep principal in perpetuity... Since my ER is only 2.8%... I guess I should feel free to raise it by 0.2%.

Hmmm.
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Old 02-10-2017, 08:51 PM   #57
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In my 3rd year of retirement, we have not exceeded 1.75% withdrawal yet. Have made some Roth conversions, but no matter what we do, Firecalc says it is going to be ugly. So we spend what we can, convert what we can, withdraw what we can, donate what we can and live life to the max. And we thank God everyday for our blessings
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Old 02-10-2017, 08:55 PM   #58
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In my 3rd year of retirement, we have not exceeded 1.75% withdrawal yet. Have made some Roth conversions, but no matter what we do, Firecalc says it is going to be ugly. So we spend what we can, convert what we can, withdraw what we can, donate what we can and live life to the max. And we thank God everyday for our blessings
Can you define what you mean when you say "firecalc says it is going to get ugly"?
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Old 02-10-2017, 09:15 PM   #59
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I stand corrected, it is RPM, Boglehead's Retiree Portfolio Model. With 2 pensions, and rental income, I can control income below 15% until 70 and then with SS, and RMDs, it goes to 28%. I'm blessed it is ugly.
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Old 02-10-2017, 09:24 PM   #60
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Well I've said this before, the easy fix for RMDs is QCDs if you want to avoid tax. Of course this means you're giving to charities instead of leaving a large legacy.
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